If your business is still doing financial reporting the traditional way — manually entering data and reconciling reports each month — you’re likely missing out on a tremendous opportunity to use that data to move your company forward.
“Traditional reporting is time-consuming, mistake-prone, produces numbers that can be difficult to understand and reports numbers after the fact,” says Matt Long, Client Advisory Services principal at Rea & Associates. “Automating and streamlining reporting provides real-time, actionable data that is easy to understand and can be customized depending on what is important to your business. You’re already collecting the data. So why not do it more effectively?”
Smart Business spoke with Long about how automating your financial reporting can save time and money, and move you ahead of the competition.
How is the automation of financial reporting changing the pace of business?
In the past, businesses waited until the end of the month, made sure all activities had been posted, then spent several days reconciling. It was an exercise that reported what happened the previous month, with no end game in mind beyond having the data for an audit or tax purposes. There was no direction as to why you were doing it, what you were getting out of it or what you could take away from it. Now, there has been a monumental shift as companies realize they need live information, not static reports at month’s end.
How has automation moved data beyond the accounting department?
Traditionally, the accounting department manually input information, and no one else understood or cared about the numbers. Automation takes the data out of accounting and allows people in all departments to look beyond the traditional profit and loss statements to look at dashboards and graphs. And you don’t need to be an accountant to interpret the data.
The data itself is not valuable, it’s how you’re using it. Departments can access the numbers they need every day. Every industry has its own metrics to consider, whether it’s a manufacturer looking at how many hours a machine is running and what that’s costing, a restaurant looking at food costs, or a dentist looking at the numbers at a procedural level.
This is the future, with more automation and fewer human hours going into compiling data. The days of having a full-time accounting department manually entering data are over. And the pandemic has accelerated that trend, forcing businesses to prioritize what is important, opening them up to new opportunities to evaluate what is being done and how it’s being done.
How can a business start the automation process?
Evaluate how you are currently doing things. An outside adviser can help you take a step back and get out of the weeds. What is happening day to day, and how does that flow into the transactional level, the accounting system?
Look at your processes and procedures, your systems, where you can find areas to improve and where there is better technology available. Talk through logistics and timing and how you can make an impactful change. And while some companies want to change very quickly, that can be a mistake. Be methodical and intentional. Do it the right way to get systems in place that will last and that you can build on as the business grows.
It’s very important to spend the time up front and do it right, or you’ll constantly be chasing your tail and playing catch-up. It’s not a one-time thing; you don’t go through the transition to automation and then forget it. There’s room for improvement in any system, some of it incremental and some very impactful. The landscape is changing so quickly, almost daily, and you need to constantly re-evaluate.
And if you’re not looking at how to do things more effectively, your competition is. You may have the edge now because of the quality of your products and services, but eventually someone who is more strategic is going to catch up and make decisions that are more impactful, passing you by.
INSIGHTS Accounting is brought to you by Rea & Associates.